Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] VectorVest fundies
Date: Sat, 9 Mar 2002 19:01:33 -0600
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This is a multi-part message in MIME format. - ------=_NextPart_000_002B_01C1C79C.D44064A0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Hi Warren, It's difficult to do justice to the VV tool in a few paragraphs, but I = will try and address your question in a way that shows how VV is = different from tools such as QP2 (and tools built on its engine and/or = MarketGuide fundamental data elements) and/or other tools that = incorporate varying degrees of technical analysis. It is true the VV does not have the raw historical fundamental data and = it is for this and a couple of other reasons that I supplement it with = DGO. Instead of providing the raw numbers, VV devotes its engine to = looking for relationships between variables. The foundational parameters = are built on long-standing stock-valuation techniques in which the value = of a stock is determined by the present value of a future earnings = stream given a particular growth rate in future earnings and a given = interest and inflation rate. This valuation is then combined with the = past profitability characteristics of the company--essentially the = return on total capital employed. The final valuation is then compared = to present price action and the expected return on the stock over time = is compared to the return on a AAA bond. While the specifics are = proprietary (just as are the specifics of DGO's A/D, GRS, SMR, etc.), = the formulations are discussed in the manual. In short, this allows you = to compare any stock in the database against another to determine the = relative value (RV) of the stock. In addition to the RV, there is also a = relative safety (RS) factor which takes not only the traditional measure = of volatility (beta--a price based measure) but also the past = fundamental volatility/safety of the stock. For example, D/E ratio, = longevity of the business, persistence of profitability and growth in = earnings, etc. etc. All of these factors are once again combined so that = any one stock can be compared against another. Essentially, VV pares = down all the raw past fundamental data and the future expected = fundamentals into a couple of numbers for you. When I look at a stream = of raw fundamentals, this is what I'm doing mentally...assessing growth = patterns, repeatability, etc. So, no, you could not do a search on QoQ = growth rates of x in the same way you can in QP2. From a technical = perspective, there is once again a summary technical price indicator = called relative timing (RT) which is difficult to describe without a = white paper. But, it essentially takes the price movement over the last = 13 weeks and the velocity of the price movement in more recent periods = and then normalizes it for values between 0 and 2. Once again, this = allows comparison of any one stock against another. (There are many more = parameters, but these are the most important). From a CANSLIM = perspective, the parameter most important is the projected forward = growth rate of the company. Without a doubt, this one factor (based on = forward EPS estimates, also given) is the fastest way to zoom in on = CANSLIM quality companies and as far as I've been able to determine, no = other software package has anything close. The other part of VV that differentiates it from something like QP2 or = HGS, etc. is the ability to look historically at any of the parameters = for the stock and then graph them. That means you have the ultimate = flexibility in designing strategies and/or asking what-if questions. The = tools included allow you to create a high/low list for any point in time = and over any period of time you wish. (For example, "what stocks over = $10 with market cap of >$10m were making new 60 day highs on December = 14, 1999?"). You can run a delta for any parameter on any date and over = any period of time. (For example, show me the stocks that have = outperformed the small cap value index over the last 3, 8, 26 and 52 = weeks. Show me how much each industry has increased in price since the = last follow through day. Etc.)_You can run a trend for any parameter for = any date and over any period of time. (For example, show me stocks that = have had a pattern of RT of ++-- over the last 4 weeks.) Not only can = this be done for any parameter but also for any combination of = parameters, on all stocks or just selected stocks, on = stocks/industries/sectors. What that means for me as a CANSLIMer is that in a heartbeat I can zoom = in on rising stocks in rising industries with all the right basic = characteristics that I require of a CANSLIM stock. I can backtest to = find out what was working when. I can design any strategy I want in = order to flow with the flavor of the market. For example, if I wanted to = more heavily weight undervalued stocks in my analysis, I could do so = (such as during the bear) If I want to overweight momentum I can do so = (such as late in the Bull) If I want to select only those stocks with = rising forward growth rates, I can do so. Since all the analysis can be = done on both stocks and industries, I can "drill down" or "drill up" = from strength to find my desired candidates. With respect to the market = timing feature of VV...it's nice, but I prefer to let the stocks = themselves speak to me rather than relying on a more macro level = indicator. The same would hold true of any index, industry, market or = group of stocks. It's really just a summary of individual stock action. = So, I mine for all CANSLIM quality stocks, then divvy them into piles to = tell me how healthy the market is from my perspective. I watch as the = stocks move from one pile to the next to tell me which direction the = market is headed. Now, after all that...I have to say that I don't stop there. Once I mine = for my candidates, I then use DGO for a take on RS and A/D. And use it = to review the raw past fundamentals and current snapshots on things like = institutional ownership, D/E, ROE, cashflow. As with any sort of = analysis there is a fine balance between past history and possible = future performance and this is what this view tells me. I finish off my = analysis with a healthy dose of due diligence in which I get to know the = company well enough to assess their financial strength, their = competitive advantage, the likelihood they will be able to sustain that = advantage over time, whether they are a leader or laggard, etc. Probably more than you wanted to know! Katherine PS...I realize that I didn't talk much about technicals, but there is = also a technical piece to VV that allows you to create all sorts of = technical graphs and indicators like MACD, RSI, candlesticks, Bollinger = bands, etc. etc....enough to make your eyes water. I stick to simple = technicals as WON suggests--just moving averages, relative strength, = accumulation/distribution and price/volume action. ----- Original Message -----=20 From: Warren Keuffel=20 To: CANSLIM list=20 Sent: Saturday, March 09, 2002 5:33 PM Subject: [CANSLIM] VectorVest fundies (This message is primarily for Katherine, who is the head cheerleader=20 for VV on the list, but others are more than welcome to chime in. I = post=20 this to the list so others may learn -- or not.) I recently have started working with the VV trial and read the docs = last=20 night. I was very surprised that -- if I am correct -- VV does not=20 provide multiple quarters of financial data as does Quotes Plus. See=20 page 22 of the VV User Manual and definitions at end of manual -- this = is a list of fields you see for each stock in Stock Viewer. Quarterly = and yearly historical performance data does not seem to be available.=20 You mentioned once that you don't use the market timing features of = VV,=20 and if VV doesn't have the historical fundie data, that basically just = leaves the sector/industry rotation and velocity data as what you get=20 from VV. Am I misunderstanding any of VV's features or your use of same? Thanks, Warren - -To subscribe/unsubscribe, email "majordomo@xmission.com" -In the email body, write "subscribe canslim" or -"unsubscribe canslim". Do not use quotes in your email. - ------=_NextPart_000_002B_01C1C79C.D44064A0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=3DContent-Type content=3D"text/html; = charset=3Diso-8859-1"> <META content=3D"MSHTML 5.50.4807.2300" name=3DGENERATOR> <STYLE></STYLE> </HEAD> <BODY bgColor=3D#ffffff> <DIV>Hi Warren,</DIV> <DIV> </DIV> <DIV>It's difficult to do justice to the VV tool in a few paragraphs, = but I will=20 try and address your question in a way that shows how VV is different = from tools=20 such as QP2 (and tools built on its engine and/or MarketGuide = fundamental data=20 elements) and/or other tools that incorporate varying degrees of = technical=20 analysis.</DIV> <DIV> </DIV> <DIV>It is true the VV does not have the raw historical fundamental data = and it=20 is for this and a couple of other reasons that I supplement it with DGO. = Instead=20 of providing the raw numbers, VV devotes its engine to looking for = relationships=20 between variables. The foundational parameters are built on = long-standing=20 stock-valuation techniques in which the value of a stock is determined = by the=20 present value of a future earnings stream given a particular growth rate = in=20 future earnings and a given interest and inflation rate. This valuation = is then=20 combined with the past profitability characteristics of the = company--essentially=20 the return on total capital employed. The final valuation is then = compared to=20 present price action and the expected return on the stock over time is = compared=20 to the return on a AAA bond. While the specifics are proprietary (just = as are=20 the specifics of DGO's A/D, GRS, SMR, etc.), the formulations are = discussed in=20 the manual. In short, this allows you to compare any stock in the = database=20 against another to determine the relative value (RV) of the stock. = In=20 addition to the RV, there is also a relative safety (RS) factor which = takes not=20 only the traditional measure of volatility (beta--a price based measure) = but=20 also the past fundamental volatility/safety of the stock. For example, = D/E=20 ratio, longevity of the business, persistence of profitability and = growth in=20 earnings, etc. etc. All of these factors are once again combined so that = any one=20 stock can be compared against another. Essentially, VV pares down all = the raw=20 past fundamental data and the future expected fundamentals into a = couple of=20 numbers for you. When I look at a stream of raw fundamentals, this = is what=20 I'm doing mentally...assessing growth patterns, repeatability, etc. So, = no, you=20 could not do a search on QoQ growth rates of x in the same way you can = in QP2.=20 From a technical perspective, there is once again a summary technical = price=20 indicator called relative timing (RT) which is difficult to describe = without a=20 white paper. But, it essentially takes the price movement over the last = 13 weeks=20 and the velocity of the price movement in more recent periods and then=20 normalizes it for values between 0 and 2. Once again, this allows = comparison of=20 any one stock against another. (There are many more parameters, but = these are=20 the most important). From a CANSLIM perspective, the parameter most = important is=20 the projected forward growth rate of the company. Without a doubt, this = one=20 factor (based on forward EPS estimates, also given) is the fastest way = to zoom=20 in on CANSLIM quality companies and as far as I've been able to = determine, no=20 other software package has anything close.</DIV> <DIV> </DIV> <DIV>The other part of VV that differentiates it from something like QP2 = or HGS,=20 etc. is the ability to look historically at any of the parameters for = the stock=20 and then graph them. That means you have the ultimate flexibility in = designing=20 strategies and/or asking what-if questions. The tools included allow you = to=20 create a high/low list for any point in time and over any = period of=20 time you wish. (For example, "what stocks over $10 with market cap of = >$10m=20 were making new 60 day highs on December 14, 1999?"). You can run a = delta for=20 any parameter on any date and over any period of time. (For example, = show me the=20 stocks that have outperformed the small cap value index over the last 3, = 8, 26=20 and 52 weeks. Show me how much each industry has increased in price = since the=20 last follow through day. Etc.)_You can run a trend for any parameter for = any=20 date and over any period of time. (For example, show me stocks that have = had a=20 pattern of RT of ++-- over the last 4 weeks.) Not only can this be done = for any=20 parameter but also for any combination of parameters, on all stocks or = just=20 selected stocks, on stocks/industries/sectors.</DIV> <DIV> </DIV> <DIV>What that means for me as a CANSLIMer is that in a heartbeat I = can=20 zoom in on rising stocks in rising industries with all the right basic=20 characteristics that I require of a CANSLIM stock. I can backtest to = find out=20 what was working when. I can design any strategy I want in order to = flow=20 with the flavor of the market. For example, if I wanted to more heavily = weight=20 undervalued stocks in my analysis, I could do so (such as during the=20 bear) If I want to overweight momentum I can do so (such as late in = the=20 Bull) If I want to select only those stocks with rising forward growth = rates, I=20 can do so. Since all the analysis can be done on both stocks and = industries, I=20 can "drill down" or "drill up" from strength to find my desired = candidates. With=20 respect to the market timing feature of VV...it's nice, but I prefer to = let the=20 stocks themselves speak to me rather than relying on a more macro level=20 indicator. The same would hold true of any index, industry, market or = group of=20 stocks. It's really just a summary of individual stock action. So, I = mine for=20 all CANSLIM quality stocks, then divvy them into piles to tell me how = healthy=20 the market is from my perspective. I watch as the stocks move from one = pile to=20 the next to tell me which direction the market is headed.</DIV> <DIV> </DIV> <DIV>Now, after all that...I have to say that I don't stop there. Once I = mine=20 for my candidates, I then use DGO for a take on RS and A/D. And use it = to review=20 the raw past fundamentals and current snapshots on things like = institutional=20 ownership, D/E, ROE, cashflow. As with any sort of analysis there is a = fine=20 balance between past history and possible future performance and this is = what=20 this view tells me. I finish off my analysis with a healthy dose of due=20 diligence in which I get to know the company well enough to assess their = financial strength, their competitive advantage, the likelihood they = will be=20 able to sustain that advantage over time, whether they are a leader or = laggard,=20 etc.</DIV> <DIV> </DIV> <DIV>Probably more than you wanted to know!</DIV> <DIV> </DIV> <DIV>Katherine</DIV> <DIV> </DIV> <DIV>PS...I realize that I didn't talk much about technicals, but there = is also=20 a technical piece to VV that allows you to create all sorts of technical = graphs=20 and indicators like MACD, RSI, candlesticks, Bollinger bands, etc. = etc....enough=20 to make your eyes water. I stick to simple technicals as WON=20 suggests--just moving averages, relative strength,=20 accumulation/distribution and price/volume action.</DIV> <DIV> </DIV> <DIV> </DIV> <DIV> </DIV> <BLOCKQUOTE=20 style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; = BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px"> <DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV> <DIV=20 style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: = black"><B>From:</B>=20 <A title=3Dwkeuffel@xmission.com = href=3D"mailto:wkeuffel@xmission.com">Warren=20 Keuffel</A> </DIV> <DIV style=3D"FONT: 10pt arial"><B>To:</B> <A = title=3Dcanslim@lists.xmission.com=20 href=3D"mailto:canslim@lists.xmission.com">CANSLIM list</A> </DIV> <DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Saturday, March 09, 2002 = 5:33=20 PM</DIV> <DIV style=3D"FONT: 10pt arial"><B>Subject:</B> [CANSLIM] VectorVest=20 fundies</DIV> <DIV><BR></DIV>(This message is primarily for Katherine, who is the = head=20 cheerleader <BR>for VV on the list, but others are more than welcome = to chime=20 in. I post <BR>this to the list so others may learn -- or = not.)<BR><BR>I=20 recently have started working with the VV trial and read the docs last = <BR>night. I was very surprised that -- if I am correct -- VV = does not=20 <BR>provide multiple quarters of financial data as does Quotes = Plus. See=20 <BR>page 22 of the VV User Manual and definitions at end of manual -- = this=20 <BR>is a list of fields you see for each stock in Stock Viewer. =20 Quarterly <BR>and yearly historical performance data does not seem to = be=20 available. <BR>You mentioned once that you don't use the market timing = features of VV, <BR>and if VV doesn't have the historical fundie data, = that=20 basically just <BR>leaves the sector/industry rotation and velocity = data as=20 what you get <BR>from VV.<BR><BR>Am I misunderstanding any of VV's = features or=20 your use of same?<BR><BR>Thanks,<BR>Warren<BR><BR><BR>-<BR>-To=20 subscribe/unsubscribe, email "<A=20 = href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>-In= the=20 email body, write "subscribe canslim" or<BR>-"unsubscribe = canslim". Do=20 not use quotes in your email.<BR></BLOCKQUOTE></BODY></HTML> - ------=_NextPart_000_002B_01C1C79C.D44064A0-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
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